The Inflection Point: Options on Hyperliquid

When Coinbase announced its $2.9 billion acquisition of Deribit in May 2025, that deal sent a clear signal across the crypto world: options are not just a niche product—they are core financial infrastructure for the future of digital assets.

Despite the importance of options as a financial product, so far no DeFi platform has generated significant volume in on-chain options. The lack is particularly striking given DeFi's structural advantages in transparency and composability. This failure stems not from insufficient demand, but in supply: until now no DeFi platform has provided the necessary components to make on-chain options trading viable.

Hyperliquid uniquely addresses the infrastructure gap that was the fundamental barrier to successful DeFi options, and with the launch of HypeEVM we are poised to see the launch of the first ever fully functional on-chain options.

Why Options Matter — and Who Uses Them

The Deribit acquisition put options firmly back on the radar of every serious trader, investor, and builder in crypto. To understand why Coinbase will spend billions acquiring an offshore options exchange, it’s worth revisiting a simple question: why are options so important in the first place?

Deribit quarterly options volume (USD Billion)

In traditional finance, options are essential tools used by the entire industry to express precise views and manage risk.

As highlighted by Deribit CEO Luuk Strijers in this industry piece, there are several core use cases for options:

• Speculators use options to make time-bound bets on price direction or volatility, often with far more favorable risk-reward profiles than perps or spot.

• Holders use options to hedge downside risk or earn passive yield by selling covered calls.

• Miners (and other entities that generate income in crypto) use options to smooth the volatility in their income stream

• Market makers use options as a critical tool in managing risk across a wide portfolio

Options allow traders to express precise views on the probability of specific price outcomes within a defined timeframe—something neither spot nor perpetuals can do. This ability to shape exposure across both time and price make options a powerful and capital-efficient tool. With options, traders can define maximum loss, maximize upside for a specific scenario, and avoid liquidation risk altogether.

Crucially, the fact that options expire is a feature, not a bug. Expiry forces clarity: you only pay for risk over the timeframe you care about. That’s why perpetual options—while conceptually elegant—have never replaced traditional dated options in traditional markets. Dated options are a way for markets to form a probabilistic consensus about the future price distribution of an asset - the implied probability distribution surface across price and time.

Implied probability distribution across price and time

As crypto matures, volatility compresses. Assets are increasingly valued based on cash flows and usage rather than hype. In this new regime, options become the instrument of choice for expressing high-conviction bets, creating tailored hedges, or generating yield—just like in TradFi. Coinbase’s acquisition of Deribit reflects this shift. The bet is clear: options are not a sideshow. They're the future of leveraged expression in crypto.

Why DeFi Options Failed: The Missing Foundation

Despite clear demand and success in centralized finance, DeFi options have yet to see widespread adoption. One of the reasons is that providing deep liquidity for options requires deep liquidity in linear derivatives (like futures or perps) and a unified margin system across positions, both of which have been missing from DeFi.

Unlike spot assets, options are convex instruments; their delta (exposure to the underlying price) changes as the market moves. This means that options market makers must constantly hedge their positions. In TradFi, this hedging is done using futures. In crypto, hedging can be done using perps.

The problem? In previous attempts at creating DeFi options, protocols launched without having a liquid perps market to hedge. If perps did exist (e.g. on a separate protocol), traders couldn’t use them in the same margin account. This segregation forced market makers to split capital across multiple venues, significantly reducing capital efficiency compared to CEXs and making the economics of DeFi options unattractive.

Some protocols attempted to launch perps and options together but failed to bootstrap sufficient liquidity on either side. Others used automated market makers (AMMs) or auction-based vaults to aggregate liquidity and risk, but lacked the granularity and responsiveness required for real-time options trading. The outcome was predictable: widened spreads, poor pricing, low usage, and an eventual reversion to centralized alternatives like Deribit.

To succeed, a DeFi options platform must have access to:

• Deep perp liquidity for reliable delta hedging

• Unified margining so collateral can be shared between perps and options

Until recently, no DeFi platform combined options with deep perps liquidity via unified margin. Which brings us to our current inflection point.

Hyperliquid: The Catalyst for DeFi Options

For the first time in DeFi’s history, we now have a platform that offers both deep perps liquidity and a composable foundation to build tightly integrated options products—Hyperliquid.

Hyperliquid daily perps trading volume, 3Q2023 to 2Q2025

Since its launch in May 2023, Hyperliquid has become the dominant venue for decentralized perpetuals, with deep order books and fast execution. Despite the attention, Hyperliquid’s most powerful feature has not yet been widely recognized: Hyperliquid is designed to be used as a composable platform for app builders.

The Hyperliquid L1 architecture enables:

1. Unified margin accounts

Traders can use perp positions in their account to offset options positions, significantly reducing capital requirements

2. Smart contract control over user portfolios (via HyperEVM + HyperCore)

Through HyperEVM integration, smart contracts can programmatically control portfolio perps positions. This allows sophisticated strategies to be implemented on-chain without sacrificing execution quality.

3. Unified state machine

All positions—spot, perpetuals, and eventually options—exist within a single state transition framework. This feature enables atomic updates and eliminates cross-venue risk.

4. Liquidity Depth

HyperCore provides access to significant existing liquidity which is available to projects building on the HyperEVM.

These features change the game for DeFi options. For the first time, options traders and market makers can operate within the same account, using the same margin, as their perps. That means if you sell a call and hedge with a perp, your capital requirement reflects the net risk—not the gross exposure. That’s capital efficiency. Capital efficiency is what enables options liquidity.

The Inflection Point

DeFi options didn’t languish because there was no demand. They haven’t yet taken off because the core ingredients haven’t been ready. With Hyperliquid's architecture, the fundamental constraints that limited previous attempts have been solved.

The ability to combine perp and options positions under the same margin system gives us the tools to finally build options markets in DeFi that rival CeFi in pricing, liquidity, and efficiency.

The DeFi options story is not merely about giving people the ability to buy calls and puts; it’s about unlocking an entire layer of financial expression, risk management, and innovation that has been locked inside centralized systems for too long.

The infrastructure is ready. The market awaits.

Hyperliquid